The investment perimeter for retail investors in the tax-free bond of Rural Electrification Corporation Ltd (REC), which opened on Tuesday, has been raised to Rs 5 lakh from Rs 1 lakh allowed earlier.

REC - Rural Electrification Corp.

This follows the modification of the definition of retail investors by the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes). The company had proposed to raise Rs 1,500 crore through the public issue of tax-free secured exchangeable non-convertible bonds of face value of Rs 1,000 each, in the nature of debentures, during financial year 2011-12.

Ministry Of Finance

It had the option to preserve over-subscription of up to an aggregate Rs 3,000 crore. The REC tax-free bond issue will close on March 12 and the minimum application amount is Rs 5,000. The retail voucher rate is 8.13 per cent for 10-year bond and 8.32 per cent for 15-year bond. The bonds are proposed to be listed on the BSE.